While historically confined to medical and academic research, challenge funds – competitive financing for innovative solutions to entrenched problems – have gained traction in the international development field over the last decade.

Pioneered by the UK Department of International Development (DFID), challenge funds have championed transformational disruptive technologies, such as M-Pesa, Kenya’s mobile money transfer service. The electronic payment system, which allows users to withdraw, deposit and transfer cash through their mobile phones, started as a pilot project funded by DFID’s Financial Deepening Challenge Fund. Today, more than two thirds of Kenyans use the channel, and the innovation has changed the scope of financial inclusion programs globally.